Skoda Finance Redemption

[ronniebarker]

I purchased my 2018 Karoq Edition brand new in Aug of that year and used the Skoda (VW) Finance package that gave me £700 of the screen price and included two free services.

I did the routine method at the time which was to pay off the Finance within a few days and was only charged about £4 in interest but kept the perks.

I'm potentially looking at my next new Skoda and wondered if this loophole was still in place or have Skoda/VW stopped this practice?

[classic]

Still in place, just doing the same thing on a used Superb, took the pcp to get 2 years warranty, 2 x services, 2 x mot and 2 years European breakdown cover.

[Rory]

Did it on a Kamiq a couple of months ago.  The VWFS lady even waived the interest charge - it's the third time I've done it, and that's never happened before.

 

I've always been slightly puzzled by the interest charge, because Withdrawing is supposed to be like there was never any finance in place, so I don't know on what basis they can charge interest.  However when it was waived, it made me slighly nervous that, if the finance had really never existed, they could try to reclaim the deposit contribution.    In practice that hasn't happened.

[kodiaqsportline]

2 hours ago, ronniebarker said:

I purchased my 2018 Karoq Edition brand new in Aug of that year and used the Skoda (VW) Finance package that gave me £700 of the screen price and included two free services.

I did the routine method at the time which was to pay off the Finance within a few days and was only charged about £4 in interest but kept the perks.

I'm potentially looking at my next new Skoda and wondered if this loophole was still in place or have Skoda/VW stopped this practice?

 

Sorry to be a tad pedantic, but for others reading this who're not familiar with this way to purchase a car, it's not a loophole.

 

The question you should be:  Does VWFS still allow financing a car through PCP to be settled at anytime during the agreement without additional penalty? And the answer is yes ( well it was up to last month. can't comment on Feb 2024  ).

 

But you're absolutley right to question it because not all manufacturers work in the same way and VWFS may change. I've come across one who hide their fees behind government guidelines which I believe goes against financial rules. The finance company should set out what that fee is and give you a breakdown of how it's calculated rather than effectively say, " we've pushed buttons and twirled knobs and come up with £626 to settle your agreement. "  It's something they add on to the settlement figure without even telling you what it's for. 

 

I've spent more hours than I should have trying to investigate this and still cannot come up with an answer to how these finance companies calculate that figure. I'm currently awaiting a decision from the financial ombusman.

 

But as far as VWFS is concerned, up until last month anyway, they we're still just charging minimal interest but not in the way you describe above. They have a min fee which is nominal ( depending on your finance package ) then what they  do is charge the greater of the two - the daily interest  or nominal fee. If you settle within a few days, the nominal fee will kick in rather than the daily interest, but it's only around the £30 mark.

 

Hope that helps.

Edited 20 February by kodiaqsportline

[Rory]

14 minutes ago, kodiaqsportline said:

 

Sorry to be a tad pedantic, but for others reading this who're not familiar with this way to purchase a car, it's not a loophole.

 

The question you should be:  Does VWFS still allow financing a car through PCP to be settled at anytime during the agreement without additional penalty? And the answer is yes ( well it was up to last month. can't comment on Feb 2024  ).

 

 

Well, to be a bit more pedantic - it's really nothing to do with VWFS, it's the law, largely the Consumer Credit Act 1974.

 

This allows you to Withdraw completely within 14 days, and like I said earlier, it's supposed to be like the finance never existed.  Because of this, the situation with incentives is a bit of a grey area,  some manufacturer finance arms have it in their T's & C's that they can be taken away, but in practice I've seen in discussed in forums populated by car sales people and they say it never happens, and we know VWFS doesn't do it (and they surely would if they could).

 

After 14 days you're Settling.  You have to give 28 days notice to the finance company and they are entitled (and always do) charge another 30 days interest as a penalty.    On a typical new car deal this is going to cost a few hundred pounds in interest.   However the situation with incentives is clearer cut - they can't be withdrawn.

Edited 20 February by Rory

[kodiaqsportline]

7 hours ago, Rory said:

I've always been slightly puzzled by the interest charge, because Withdrawing is supposed to be like...

 

6 hours ago, Rory said:

 

Well, to be a bit more pedantic - it's really nothing to do with VWFS, it's the law, largely the Consumer Credit Act 1974.

 

This allows you to Withdraw completely within 14 days, and like I said earlier, it's supposed to be like the finance never existed.  Because of this, the situation with incentives is a bit of a grey area,  some manufacturer finance arms have it in their T's & C's that they can be taken away, but in practice I've seen in discussed in forums populated by car sales people and they say it never happens, and we know VWFS doesn't do it (and they surely would if they could).

 

After 14 days you're Settling.  You have to give 28 days notice to the finance company and they are entitled (and always do) charge another 30 days interest as a penalty.    On a typical new car deal this is going to cost a few hundred pounds in interest.   However the situation with incentives is clearer cut - they can't be withdrawn.

 

Look, this has been discussed before. You've went thru the process but obviously you have no idea how it works.

 

1: You are NOT withdrawing  from the PCP, you are settling the PCP.

 

2: The 14day period has nothing whatsoever to do with settling a PCP. 

 

People get confused between cancelling a PCP and settling a PCP and no wonder, because what you've just written is complete garbage. You did NOT cancel your PCP, you settled it.

 

After 14 days you're Settling.   WTF ?   You can settle after 14hrs, 14 days, 14 weeks, 14 months etc.  You can settle a PCP at anytime, however you only have a limited period before you can cancel the agreement without penalty, as set out in the various credit acts.

 

If you look at my past history, I've explained step-by-step how it works for those who don't understand it.

 

[Berisford]

Ordered a new Karoq recently and the dealer asked me outright, do I really want the finance or am I intending to pay it off within a couple of days?

Gave him the honest answer. He was fine with it, though my projected delivery keeps getting put back!

[Choclab]

Seduced by two free services, I went for two years hire purchase, totally forgetting I have to pay half the loan before I can pay off the outstanding. Always had pcp finance, and paid off early, so a bit annoyed with myself. Still, roll on September.

[Rory]

15 hours ago, kodiaqsportline said:

 

 

Look, this has been discussed before. You've went thru the process but obviously you have no idea how it works.

 

1: You are NOT withdrawing  from the PCP, you are settling the PCP.

 

2: The 14day period has nothing whatsoever to do with settling a PCP. 

 

People get confused between cancelling a PCP and settling a PCP and no wonder, because what you've just written is complete garbage. You did NOT cancel your PCP, you settled it.

 

After 14 days you're Settling.   WTF ?   You can settle after 14hrs, 14 days, 14 weeks, 14 months etc.  You can settle a PCP at anytime, however you only have a limited period before you can cancel the agreement without penalty, as set out in the various credit acts.

 

If you look at my past history, I've explained step-by-step how it works for those who don't understand it.

 

 

I'm sorry, but that's mostly the same as I wrote, except that you're wrong about Settling.  If people Settled with 14 days they'd have hundreds of pounds of interest to pay, not the few pounds usually charged on Withdrawing.

 

 

[SurreyJohn]

5 hours ago, Rory said:

 

I'm sorry, but that's mostly the same as I wrote, except that you're wrong about Settling.  If people Settled with 14 days they'd have hundreds of pounds of interest to pay, not the few pounds usually charged on Withdrawing.

You are getting confused, withdrawing is another term for changing your mind in first few days, that is terminating through cancelling (ie where everything goes back as if deal hadn't happened, no car sale and no loan)

 

Settling is paying off the remaining outstanding.  In first 14 days there is just token bit of daily interest or small flat fee.  After 14 days usually got to pay another months interest.   Not hundreds of pounds extra interest (although on big loans a months interest could be couple of hundred pounds)

 

Nowadays the loans are online, and printed after electronic signature in the dealers, so go live within seconds.   But at one time it would take couple of days for loan paperwork to be mailed to finance Co and in turn entered on their system, so had to give them few days before you could call to settle.

 

I am not sure if you are (incorrectly) using term withdrawing to mean a voluntary early handback and sale of the car, where it's value part settles the loan and there is a shortfall which requires hundreds of pounds of cash to cover the shortfall.

 

 

Edited 21 February by SurreyJohn

[Rory]

2 hours ago, SurreyJohn said:

You are getting confused, withdrawing is another term for changing your mind in first few days, that is terminating through cancelling (ie where everything goes back as if deal hadn't happened, no car sale and no loan)

 

 

No - specifically if you Withdraw from the finance you are still required to pay for the car.    Withdrawal is a specific term in the CCA:  https://www.legislation.gov.uk/ukpga/1974/39/section/66A

 

2 hours ago, SurreyJohn said:

Settling is paying off the remaining outstanding.  In first 14 days there is just token bit of daily interest or small flat fee.  After 14 days usually got to pay another months interest.   Not hundreds of pounds extra interest (although on big loans a months interest could be couple of hundred pounds)

 

 

No - Settling (the Act calls it" Right to complete payments ahead of time" requires 28 days notice to be given.  So you simply can't "Settle" in 14 days - well, in theory you could, but you get charged for the 28 days anyway, plus 30 days interest early settlement penalty.

 

 

I've done this multiple times for myself and family members and I'm completely confident I understand how it works, so I'll leave it there.

 

Edited 21 February by Rory

[Korran_Kuat]

Hi all,

 

Thanks for the great information. 

 

I'm about to sign the PCP paperwork for a used Octavia this morning and picking it up this afternoon. 

 

It's my understanding that I can still pay off the PCP payment within 14 days and not lose my incentives. Is that others experience?

 

Thanks. 

[kodiaqsportline]

13 hours ago, Rory said:

 

No - specifically if you Withdraw from the finance you are still required to pay for the car.    Withdrawal is a specific term in the CCA:  https://www.legislation.gov.uk/ukpga/1974/39/section/66A

 

 

No - Settling (the Act calls it" Right to complete payments ahead of time" requires 28 days notice to be given.  So you simply can't "Settle" in 14 days - well, in theory you could, but you get charged for the 28 days anyway, plus 30 days interest early settlement penalty.

 

 

I've done this multiple times for myself and family members and I'm completely confident I understand how it works, so I'll leave it there.

 

 

You can leave it there but for those who're unfamiliar with the process and want to find out more...

 

Under PCP, it's the finance company who own the car. If you withdraw / cancel the agreement, the finance company take the car back. If you Settle the agreement, you own the car. It's as simple as that.

 

You can settle an agreement within 24hr if you so want. The general advice is to give it a few days for the process to be setup.

 

When you take out PCP, VWFS will set up the agreement on their website. You can access it without having to speak to anyone - the process is now fully automatic. You register your name, you log in and you'll see a list of options, one of which is to settle the agreement. You request a settlement figure.  VWFS will then give you a figure and you have 28days to settle ( from memory that is...  it might be a full month, I can't remember the exact figure ) without further interest, otherwise the PCP agreement continues as normal.

 

You say you've done this multiple times?  Next time you do it, pay attention to the wording.

 

Here's the link...   Settlement request

 

There is no such option to withdraw. You're using the wrong terminology.

 

I 100% agree with @SurreyJohn, withdrawing implies you no longer wish to continue with the agrement whereas settlement implies fulfilling the agreement.

 

Well, to be a bit more pedantic - it's really nothing to do with VWFS, it's the law, largely the Consumer Credit Act 1974. This allows you to Withdraw completely within 14 days,

 

No, that's for people canceling a credit agreement. It's designed as a 'cooling off period'.  There was a time when as soon as you put pen to paper, a credit company could hold a gun to your head, the 14 day cooling off was introduced to stop that practice. You can cancel a credit agreement within 14days without penalty. 

 

 

Edited 22 February by kodiaqsportline